Insight New Zealand 2007 Ltd v Johnstone

This case arose from a difficult incident in a disability support setting. After a resident fell or collapsed during breakfast and later became seriously unwell, the employer dismissed one support worker for serious misconduct and gave the other a final warning.

The Employment Court upheld the Authority’s finding that the dismissal was unjustified. The Court focused on three practical problems: the employer relied on an unclear unwritten ambulance-calling policy, it judged the employee’s actions with the benefit of hindsight, and it could not properly explain why two employees involved in the same incident were treated so differently.

Ms Johnstone was an experienced support worker with a long career in disability services. During a morning shift overlap, she and a co-worker were both present when a resident known as X ended up on the floor during breakfast. The co-worker saw most of the event and reached X first. Ms Johnstone had been in the kitchen and did not see the fall itself.

After some basic checks, both workers thought X had returned to normal. He finished breakfast, continued his routine and went to work. Ms Johnstone also arranged a doctor’s appointment for later that day. But a few hours later X became seriously unwell at the marae, was taken to hospital and later received a pacemaker. The family then removed X from Insight’s care, creating obvious operational and reputational consequences for the business.

Insight investigated both workers. It concluded Ms Johnstone had failed to appreciate the seriousness of the event, should have called an ambulance, should have urgently contacted the manager and should have completed an incident report sooner. It also treated her as trying to shift responsibility to the other worker. She was summarily dismissed. The other worker, Mr Penman, received a final written warning.

The legal question was whether Insight’s decision to dismiss Ms Johnstone was what a fair and reasonable employer could have done in all the circumstances at the time, applying section 103A of the Employment Relations Act 2000. The Court was not deciding the incident afresh as if it were the employer. Instead, it examined whether the employer’s investigation, findings and sanction were objectively fair and reasonable.

The main issues were practical ones. Was there really a policy requiring an ambulance to be called in these circumstances? If so, had Ms Johnstone breached it? Did she breach policies about contacting the manager and incident reporting? Were any breaches serious enough to justify summary dismissal? And if another employee involved in the same incident was treated more lightly, was that disparity properly explained?

The Court found the dismissal was unjustified and left the Authority’s remedies in place. A key reason was that there was no written policy clearly stating when an ambulance had to be called. The employer relied on an unwritten policy, but the Court found its scope and application were unclear. It involved judgment and common sense, which meant there could be a range of reasonable responses.

The Court accepted that, at the time of the breakfast incident, Ms Johnstone and Mr Penman carried out basic checks and believed X had returned to normal. The Court also found the employer had relied too much on hindsight because X later became seriously unwell. There was no medical evidence establishing that the breakfast incident was a precursor to the later heart problem.

On manager contact, the Court was not satisfied Ms Johnstone breached policy simply because she did not personally make the contact. She and Mr Penman had divided tasks and he did contact the manager. On incident reporting, the Court accepted there was delay, but not enough to amount to serious misconduct in the circumstances. The Court also found an unexplained disparity between dismissing Ms Johnstone and only warning Mr Penman.

This decision matters well beyond the care sector. Many small and medium businesses rely on informal rules, verbal training and manager expectations. That can work operationally, but it becomes risky when you later try to justify dismissal for serious misconduct. If the rule is not written clearly, staff may reasonably apply their own judgment, and a court may be reluctant to treat a disputed breach as dismissal-level misconduct.

The case also shows the danger of outcome-driven reasoning. When something later goes badly wrong, it is tempting to treat earlier decisions as obviously unacceptable. But disciplinary decisions must focus on what the employee knew, saw and reasonably understood at the time. If later events colour your findings, your process may look unfair.

Another practical point is consistency. If two employees were involved in the same event, you do not need identical outcomes. But you do need a defensible reason for any difference. Contrition, role differences or prior conduct may matter, but they need to be real and proportionate. Otherwise, disparity can undermine the whole dismissal.

If you are reviewing a serious workplace incident, slow the process down enough to separate the event itself from the disciplinary conclusion. The Court’s reasoning in this case gives a practical checklist for employers who want their decisions to hold up.

Start with the rule. Identify the exact policy, whether it is written, how staff were trained on it and whether it clearly applies to the facts. Then test the evidence. If witness accounts conflict, do not simply choose the version that best supports dismissal without explaining why. Finally, compare treatment across employees involved in the same event and document the reason for any difference.

The strongest business lesson from this case is that policy design and disciplinary process are linked. A vague policy may still guide day-to-day operations, but it is much less reliable as the foundation for summary dismissal. If you want to require a particular response, such as calling emergency services, escalating to a manager immediately or filing a report within 24 hours, say so in plain language and explain the purpose of the rule.

The judgment also shows that not every policy breach is serious misconduct. A late report may be a valid concern, but the seriousness depends on context, the wording of the policy, the practical impact of the delay and whether the business was actually prevented from responding. Here, the Court noted that management already had information about the incident and the delay did not stop the business from understanding events or communicating with the family and Whaikaha.

For SMEs, this is a reminder to match the sanction to the proven conduct. Summary dismissal is the highest response. It needs a solid factual basis, a clear rule and a reasoned explanation for why trust and confidence were so badly damaged that employment could not continue.